(gentle music)
- Dave, M&A has been an unlock and a tool
for Moody's in its journey of becoming
an integrated risk assessment provider.
How do you think about M&A?
- I have a counterintuitive answer,
particularly for an M&A guy.
So, believe it or not, in my perfect world,
all growth would be organic.
Why?
Because the things that you build yourself
with the ingredients in the cupboard
have the highest return profile.
That's a fact.
Sometimes it's hard to do it yourself.
Senior management have many objectives
and demands and things to do on their plate.
And something you thought might get done in say,
I don't know, six months and cost a hundred dollars,
might get lost in the shuffle.
So maybe it's done in 18 months and it costs you $200,
but some other competitor got there first
and they built the capability,
recruited the subject matter experts,
the people, or whatever.
So you gotta ask yourself and be honest with yourself:
is whatever we're talking about,
is it a nice to have or is it a need to have?
If it's really important
and there's a real revenue opportunity,
a customer value proposition that's unmet
where they need your help
and you can buy something at scale
and achieve an appropriate risk-adjusted return
on the capital and also get great new colleagues
in the bargain, then it's probably better to buy than build.
Here's the thing.
An integration starts during due diligence.
You have got to start planning for how people
are going to work together to combine the best
of what you have and the best of what they have.
There can't be an attitude of not invented here
and where incumbency wins, right?
That does not work.
The people that you're working with
on the diligence process, if everything goes right,
they're gonna be your colleagues and potential new leaders.
They're people, they're not assets.
there has to be a good match,
and people want to feel wanted and they want to feel valued.
(gentle music)